Forest City shareholders OK sale of company to Brookfield

Forest City HQ Vocon 2018

Employees walk through the lobby of Forest City Realty Trust, Inc.'s new headquarters at Key Tower in downtown Cleveland. On Thursday, the company's shareholders approved a deal to sell the nearly century-old real estate business to an affiliate of Brookfield Asset Management.
(Vocon)

CLEVELAND, Ohio -- Shareholders of Forest City Realty Trust, Inc., voted Thursday morning to sell the nearly century-old Cleveland company, in a short, undramatic meeting that stood in sharp contrast to the past year of uncertainty and tumult.

Preliminary results show that owners of 67.42 percent of the real estate company's outstanding shares supported selling the business to an affiliate of Brookfield Asset Management, a Toronto-based global investment giant. The nearly $7 billion sale is expected to occur by Dec. 10.

Forest City's stockholders also signed off on an executive-compensation plan that includes payouts, known as golden parachutes, for company leaders who lose their jobs as a result of the sale.

The meeting was a no-fanfare affair. Nobody stood to ask a question or offer up a comment. Albert Ratner, a 90-year-old former chief executive officer and member of the company's founding family who unsuccessfully sued this week to delay the vote, wasn't present.

After the crowd dispersed, CEO and President David LaRue described the moment as bittersweet.

"I'm going to look back, always, with good thoughts," said LaRue, who has worked at Forest City since 1986 and who, ultimately, was the swing vote when the deeply divided board of directors decided to forge ahead with Brookfield. "And I'm pleased that the company is going to be able to move forward."

He expressed relief that there's a clear path forward now, ending a journey that began in September 2017 with a strategic review of the company's options, led to an initial rejection of Brookfield's offer and a board revamp in March, pivoted to a new agreement with Brookfield in late July and culminated in weeks of escalating pushback from Ratner, who believed that shareholders were getting shortchanged.

But LaRue noted that there's still a complicated closing process to get through. And there still are unanswered questions, including what Brookfield will do with Forest City's downtown Cleveland headquarters offices and the 350 or so people who work there.

Regulatory filings show that Brookfield plans to hang onto Forest City's property-level employees, roughly 660 people who work at apartment complexes, office buildings and mixed-use projects across the country. And Brookfield has agreed to maintain current wages and bonus targets, and comparable benefits, for at least a year for non-union Forest City employees who survive the sale.

LaRue commended employees for staying focused and said that he has "the highest amount of respect for the company, for the family, for the history."